Wednesday, September 10, 2014

Fundamental Analysis for Aussie on 10th Sept 2014


Sumarry on AUD fundamental analysis as below.

Australia Gives Up on Australia as Investment Dwindles

Australia’s biggest companies are giving up on growth.

Reserve Bank of Australia Governor Glenn Stevens, who slashed borrowing costs to a record low, is relying on companies to recover their “animal spirits” and take risks to reignite the economy. Yet firms grappling with an overvalued currency and high costs that leave them unable to compete in export markets are opting to play it safe. 

Only a large real depreciation of the Australian dollar will change this reality,” said Ross Garnaut, a professor of economics at Melbourne University and former economic adviser to Prime Minister Bob Hawke.

The pattern is repeated across industries, slowing growth in an economy where the unemployment rate exceeded the U.S. level in July for the first time since 2007, and company profits dropped in the second quarter by the most in five years. Australia, which has expanded for 23 years, is losing its developed-world-beating status as the mining investment boom that powered it through the global financial crisis wanes. 

Fundamental Analysis for GBP on 10th Sept 2014


Fundamental analysis for GBP as below.

Preview: UK parliamentarians to grill Carney over policy conundrum

The TSC Inflation Report hearing is expected to focus on the latest round of forecasts and the BoE's appropriate response to the ongoing economic and political circumstances.

Speaking at the 146th Annual Trades Union Congress in Liverpool on Tuesday, Governor Mark Carney said market expectations of the first rate hike by spring next year fits the central bank's estimate for the medium-term inflation outlook to settle at around 2%.

Carney also said the UK economic recovery has momentum, but significantly weak wages and remaining slack in the labor market do not bode well with premature increases of interest rates. The governor also reiterated that once the rates begin to rise, increases will be gradual and slow and dependent on labor market data such as earnings and slack.  

Carney hints at spring 2015 rate rise

Bank of England governor Mark Carney has hinted interest rates could rise in the spring of next year as the UK economy continues to recover from one of the worst downturns it has ever faced.

The governor told an audience at the Trades Union Conference in Liverpool if the surprising strength of the labour market continues, and inflation does not change course, rates may start to climb in line with market expectations.  

Carney said: "Our latest forecasts show that, if interest rates were to follow the path expected by markets - that is, beginning to increase by the spring and thereafter rising very gradually - inflation would settle at around 2% by the end of the forecast and a further 1.2 million jobs would have been created. 

The Bank of England has kept interest rates at the record low of 0.5% since March 2009. In the run up to the financial crisis, the Base Rate peaked at 5.75% in June 2007, before a series of cuts brought it to today's low. 

Monday, September 8, 2014

Fundamental Analysis for USD on 8th Sept 2014

Summary on USD Fundamental Analysis as below.

5 Things To Watch On The Economic Calendar

 A lackluster increase in payrolls of only 142,000 jobs in August was a surprise, although the details in the employment report looked stronger. Next week’s economic reports may soften the sting of the jobs report.

The Commerce Department will release the August retail sales report Friday. Economists surveyed by The Wall Street Journal expect a big gain in the top-line sales number for two reasons. First demand for new vehicles surged last month, with sales at an annual rate above 17 million.  Second, major store chains have reported healthy sales activity, helped by back-to-school shopping.

But take a look at the hiring rate, how fast businesses are adding workers in relation to existing payrolls. In June, the rate edged up to 3.9%, the highest reading since mid-2008. The hiring rate is one of the job-related data points the Fed is watching.

The U.S. Labor Department usually expects a drop in the unadjusted number of jobless claims filed in the first week in September (mainly because of Labor Day). The closings of the Showboat and Revel casinos put more than 5,000 employees out of work. The number of newly unemployed was so large, the state Labor Department and casino workers’ union held a special forum so workers could file for unemployment benefits. 

After Fed chairwoman Janet Yellen highlighted research done on labor market indicators, the Kansas City Fed fleshed out the research to create two labor market conditions indexes that aggregate 24 different indicators. One measures the level of activity while the second gauges momentum.


Jobs Report Has Something for Everyone 

The report confirms that the U.S. economy, while steadily improving and a lot stronger than Europe's, has yet to reach the “escape velocity” needed to overcome the risk of stagnation.

At 142,000, net nonfarm job creation in August fell well short of expectations and represented the worst monthly performance so far this year

Fortunately, a number of areas showed improvement, including those that speak to the structural health of the labor market. Long-term unemployment fell by 192,000 to 3 million while the rate of teenage unemployment declined from 20.2 percent in July to 19.6 percent in August, a full three percentage points lower than a year ago. Annual wage growth edged up to 2.1 percent, led by a stronger private sector. And the improvements in both conventional and broader unemployment measures, while slight, were genuine and not due to a decline in labor participation.

Friday, September 5, 2014

Fundamental Analysis on EURO 5th Sept 2014


Summary on Fundamental Analysis for Euro as below.

ECB Readying Asset-Backed Purchases After Rate Cut, Draghi Says

The European Central Bank cut interest rates and will start buying assets, in a bid to boost the flow of funding for the euro-area economy while stopping short of broad-based quantitative easing

ECB President Mario Draghi’s plan to buy asset-backed securities and covered bonds pushed the euro below $1.30 for the first time since July 2013 as he said the inflation outlook had worsened.

Euro-area inflation languished at 0.3 percent last month, far below the ECB’s 2 percent target.

Gross domestic product is now predicted to expand by 0.9 percent this year and 1.6 percent in 2015, instead of the previous 1 percent and 1.7 percent. Inflation is seen at 0.6 percent this year instead of 0.7 percent previously. 

ECB Unexpectedly Cuts Interest Rates as Outlook Darkens 

The European Central Bank unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation.

Plans to outline a purchase program for ABS and covered bonds worth as much as 500 billion euros ($656 billion) were discussed by the Governing Council, Reuters reported today, citing unidentified people familiar with the discussions.  

The rate cuts come after gross domestic product in the euro area unexpectedly stagnated in the second quarter as the three biggest economies failed to grow. Germany’s economy, the region’s largest, shrank 0.2 percent, its first contraction since the start of 2013.

Fundamental Analysis on GBP 5th Sept 2014


Summary on GBP fundamental analysis.

Bank of England Keeps Record-Low Rate on Weak Inflation

The Bank of England kept its key interest rate at a record-low today after persistent weakness in inflation and wage growth reinforced the case for keeping emergency stimulus. 

The Monetary Policy Committee’s decision also came against a backdrop of a weakening euro-region economy and tensions with Russia over Ukraine. It was the last before Scotland holds an independence referendum that threatens to break the U.K. apart.

Nevertheless, Carney says weak wages and a lack of inflation pressures weigh against a policy change now. Consumer-price growth slowed to 1.6 percent in July, its seventh month below the 2 percent target.

Evidence of a slowdown is already emerging. An index of factory growth fell to the lowest level in more than a year in August. While services strengthened, there were signs of weakness, with new orders and confidence among firms slipping.

Fundamental Analysis on USD 5th September 2014


Summary on fundamental analysis,

Payrolls in U.S. Rose 142,000 in August, Fewest This Year

American employers hired fewer workers than forecast in August and the jobless rate dropped because people left the workforce, bolstering those on the Federal Reserve who want to be more deliberate in removing monetary stimulus.

The 142,000 advance in payrolls was weaker than the lowest estimate in a Bloomberg survey and followed a revised 212,000 gain in July, figures from the Labor Department showed today in Washington.

Fed policy makers will use today’s report to help discern the extent of slack in the labor market as they pare back record monetary stimulus, while keeping interest rates low at the same time.

The August advance broke a six-month string of payroll gains of more than 200,000. 




Thursday, September 4, 2014

Fundamental Analysis EURO 4th Sept 2014


Summary of Euro fundamental analysis.

Draghi under pressure of his own making to deliver ECB stimulus

Draghi's problem is the ECB is running out of weapons with which to fight the low inflation - running at just 0.3 percent - and stagnation gripping the 18-country euro zone. The ECB targets inflation of just under 2 percent over the medium term. 

The one big weapon the ECB retains is quantitative easing (QE) - essentially printing money to buy assets. Though other central banks have used this tool, hawkish members of the ECB's 24-member policymaking council are resistant.

Another policy option the ECB has flagged without yet launching is a programme to purchase asset-backed securities (ABS), with a view to stimulating this market and offering smaller businesses an alternative source of funding.
"It's difficult to imagine the ECB turning up on Thursday and doing very little," said ABN Amro analyst Nick Kounis. "I think the ABS purchase programme is the absolute minimum."

Eurozone retail sales fall at fastest rate in 16 months as downturn spreads to Germany

August sees solid and accelerated drop in eurozone retail sales.
Wholesale price inflation at 56 month low as weakness filters through to supply chain